European Central Bank remained its key interest rates unchanged after the latest meeting. Despite the surprising results of the referendum in the UK and unclear consequences, the bank has decided to wait for more economic indicators before eventually lower interest rates. The interest rate on the main refinancing operations remained 0%, and the marginal lending facility is 0.25%. The deposit rate is in negative territory at -0.40%. The decision was largely expected, especially after last week’s Bank of England refrained from intervention. Markets predicted that ECB President Mario Draghi will follow the actions of his colleague in London.
“After the referendum in UK, the financial markets in the Eurozone stood the surge in uncertainty and volatility with increased durability. Expressed willingness of central banks to provide liquidity, streamlined monetary policy and stabilization of the regulatory framework, have helped to stress this market to be limited. They continue to support our core scenario for continuing economic recovery and higher inflation”, said ECB President Mario Draghi on a press conference. “However, given the prevailing uncertainty Governing Board of the Central Bank of the Eurozone will continue to monitor developments in the economy and financial markets to ensure simplified the transmission of monetary policy to the real economy. In the coming months, when we will have more information, including new forecasts, we will be in a better position to reconsider the basic macroeconomic conditions likely trajectory of inflation and economic growth and risks in these areas. If necessary to achieve these goals, the Board will act, using all available instruments in its mandate”, added he.
According to the President of the ECB recovery of the monetary union continues at a moderate pace, but is likely to slow in the second quarter compared with the first. He also urged politicians to accelerate the implementation of reforms to improve the business environment.
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